Nasdaq CEO sees remedy talks with DOJ on NYSE plan

JacobBunge

(Updates with comments on NYSE deal vote timing, competition in European derivatives and additional background, beginning in sixth paragraph.)

The chief executive of Nasdaq OMX Group
NDAQ, +1.25%
said he anticipates discussing antitrust remedies with regulators reviewing his company's proposal to take over the New York Stock Exchange, but that any ground given wouldn't dramatically change his plan to create a flagship for U.S. share listings.

Department of Justice staff have set a brisk pace for reviewing the proposal, according to Nasdaq OMX CEO Bob Greifeld, who added that he expects stricter oversight of the listings business should his company's bid for NYSE Euronext
NYX, -0.22%
win out.

"We expect there will be remedy discussions with the DOJ," said Greifeld, speaking to investors at an event hosted by UBS AG (UBS). "We're sanguine in that these actions don't change the business model we're looking at."

The combination of nearly all U.S. share listings under a single parent is seen as the biggest U.S. regulatory hurdle facing the joint proposal by Nasdaq OMX and partner IntercontinentalExchange Inc.
ICE, +0.34%
to buy NYSE Euronext, w hich in February agreed to merge with Germany's Deutsche Boerse AG (DB1.XE).

NYSE Euronext has repeatedly rebuffed its uninvited suitors, prompting ICE and Nasdaq last week to take their case directly to Big Board shareholders. Achieving some clarity on whether the ICE-Nasdaq proposal could pass muster with U.S. regulators is key to securing NYSE investor support ahead of a July 7 vote on the Deutsche Boerse combination.

Greifeld said in an interview Tuesday there was little Nasdaq OMX and ICE could do to delay that vote, which the partners yesterday said was being "rushed" by an NYSE Euronext board that has refused to entertain the competing offer.

"The only way that vote gets pushed back is if they believe that they're not going to get the vote, then they would voluntarily push it back," Greifeld said.

"We find it curious that shareholders have to vote on ... any deal so far ahead of regulatory approval, especially when the regulatory approval process and the remedies that might be requested can have an impact on the financial aspect of the deal," Greifeld said. "So we think the rush to a July 7 vote is taking away certainly some shareholder visibility from what the economics of the transaction might be."

Both the NYSE-Deutsche Boerse and Nasdaq-ICE teams say their deal for NYSE Euronext can close by the end of 2011. Nasdaq and ICE are prepared to pursue their offer for as long as 12 months, but Greifeld said Tuesday he didn't think it would take that long.

He told investors Tuesday that a formal filing of the Nasdaq-ICE tender offer for NYSE shares would come in "a couple weeks," and that the partners are striving to remove some of the conditions from their offer, which include getting around a 20% cap on any one entity's ownership in the stock.

Should Nasdaq OMX's bid for its archrival fail, Greifeld said his company would evaluate new opportunities in markets that a combined NYSE-Deutsche Boerse would dominate -- specifically the trading of European futures and options contracts.

"If there is that vertical silo across Europe on listed derivatives, the customers will want to express their will and create alternatives to that monopoly," he said. "And it would be our job to be properly positioned in that eventuality."

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